Style: Designer denims give Levi's a kick in the pants

Levi Strauss & Co ships a million pairs of blue jeans a day. But the 50-year-old firm that prides itself as an American icon has laid off one third of its US workforce - the human casualties of "designer jeans" and cheap imitations, as Tim Cornwell discovers.

It was, said a Levi Strauss spokesman, in a phrase he used repeatedly, part of the "ebb and flow" for one of America's oldest companies. But this particular ebb is probably deeper than most in the company's illustrious history.

Levi's was founded in San Francisco to supply working clothes to the 49ers (the miners of the California gold-rush in 1849) and its staged retreat in the US market came after a decade of record growth. But it was hard not to read its decision this week to close 11 US plants as a result of deeper cultural changes in a nation that now sips gourmet coffee and proposes to ban the Marlboro Man.

In the West, the spiritual home of jeans, bottoms that once bounced in the saddle are likely to remain planted firmly in office chairs, and the region now prides itself on high-tech home offices rather than ranching. Levi's grew through the recession of the early 1990s, but this year, with the American economy flourishing, sales of its jeans actually shrank for the first time since the mid 1980s.

Americans can pick and choose high-priced jeans from fashion labels like Tommy Hilfiger or Calvin Klein. hey can opt for soft fabrics, stone-washed or sand-blasted, or choose cheaper, generic brands, often sewn overseas, that are said to offer similar quality without the Levi's label.

Levi's closures also confirmed, for some, the cruellest lesson about the modern American employment market. A family-run company that prided itself on "aspirational behaviour" and political correctness - attempting to re-educate Czech employees on attitudes to gypsies, for example - it publicly refused to exploit cheap labour in Mexico or Asia. Its US employees had, on average, 10 years service with the company.

In the Great Depression, the company boasted, it kept workers busy laying floors in its San Francisco plant while it waited for demand to recover. But Levi's has now belatedly joined the great wave of corporate restructurings from the 1980s, letting 6,400 people go because, it said, there was nothing for them to do. For the first time, Levi's will have more employees overseas than at home.

"Wealthy and magnanimous, Levi Strauss allowed its employees to forget one of the great economic lessons of our age: that job security is dead and gone," the business magazine Fortune observed, after a first round of lay-offs earlier this year. "This is a company that needed a kick in the pants and got one."

Three plants closed in El Paso, Texas. In Centerville, Tennessee, the mayor called for a crisis meeting with the state's governor. The trauma for small-town factories, mostly in theSouth, was softened by one of the most generous severance packages ever seen.

Workers will get eight months' paid notice, even if they immediately find other jobs, health care for 18 months, and $6,000 for job training or relocation. The Levi Strauss Foundation will spend $8m on community aid. There was, remarkably, not a whisper from the biggest textile workers' union, UNITE. Its statement instead praised the company's "high-road management".

The slogan of a recent Levi's advertising campaign, unveiled amid much fanfare earlier this year, was "They Go On". It is now under review.